Victory against Cristiano Ronaldo & Co means Spain will now take on Belgium in the quarters in their first run to the last eight since 2010 in South Africa.
Arsenal star Merino was vital for Spain in qualifying for the World Cup, tying with Mikel Oyarzabal on six goals, and despite not being a regular starter at the World Cup - he's played a key role.
Merino was introduced as part of a double substitution by Luis de la Fuente on 85 minutes and he crisply steered past Diogo Costa as the game moved into added time.
Spain withstood some late pressure from Portugal to get over the line and De la Fuente was full of praise for his matchwinner at full-time.
"Mikel Merino never disappoints, he's a sure thing for Spain. He won us the European Championship and he's always there when it matters most.
"He's one of the best players in the world in his position. We have players on the bench who would be starters on any other national team.
"I make my decisions always thinking about what's best for the team. I'm never opportunistic. I could be, but I'm not. Mikel performs exceptionally well and is always where he needs to be and that's a huge asset for us."
Despite his heroics, De la Fuente was coy over the chances of a start for Merino against the Belgians, with Rodri, Pedri and Dani Olmo set as his preferred midfield trio at the World Cup.